Kevin Killeen/Carol Daniel

ST. LOUIS (KMOX) – The man who wants to give north St. Louis an extreme makeover faces a funding battle this morning before the Missouri Supreme Court.

Developer Paul McKee is fighting a lawsuit that alleges the $28 million in state tax credits he has received are unconstitutional.

The plaintiffs, Keith Marquard and Barbara Manzara, argue the Distressed Areas Land Assemblage Tax Credit Act violates the Missouri Constitution — because it grants tax dollars to private interests.

The law, which was passed by the legislature at the urging of McKee, gives tax relief for a developer who acquires 50 acres or more of land in distressed neighborhoods.

McKee’s attorney, Paul Puricelli, says he’ll present two technical arguments in McKee’s favor — that the plaintiff’s “lack standing,” and that the tax credits benefit the “public good.”

McKee’s team will also argue that the two northside residents suing to stop the plan lack standing, because while they have the right to challenge the expenditure of public money, technically, a tax credit is not money.

“It is not an expenditure of money,” Puricelli said. “It’s an offset to someone’s potential tax liability .”

Puricelli claims the tax credits benefit the public, not private interests, because they can only be spent in the northside neighborhoods where McKee has bought up property.

“It benefits the public good, because any tax credit proceeds have to be used to redevelop the blighted property,” Puricelli said.

But Attorney Irene J. Smith,representing the two plaintiffs, says the law is on her side.

“In fact, the Missouri Supreme Court in the Curchin decision in 1987 (Curchin v. Missouri Industrial Development Board) that a tax credit is indeed an expenditure,” Smith said. “If it were not an expenditure why then would there be attached to it a fiscal note?”

Smith says she hopes the supreme court sends a message to the legislature. “You can’t just spend our money any which way. It has to line up, it has to be constitutional.”

If McKee loses the suit, he would have to refund the cash value of the credits within 30 days.

Meanwhile, a separate court ruling that struck down the city’s $390 million tax increment financing package for Mckee is on appeal. It could be argued in the fall.

(Copyright KMOX Radio)


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